Why Local Economies Matter

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Share the World's Resources (STWR)

Why Local Economies Matter

Around the world, there is a growing movement to pull back from the relentless march of corporate globalization by re-rooting economic and social activities at the community level. From the burgeoning popularity of farmers' markets and food co-ops to the revitalization of community banking, people are organizing themselves to reclaim the economy from large profit-driven corporations and instead build sustainable, local alternatives.

While the term ‘localization' has never gained popular currency (perhaps because it is so easily misunderstood), it is worth considering a broad definition for this trend towards small-scale, community-oriented businesses. In Localization: A Global Manifesto, Colin Hines defines localization as "a process which reverses the trend of globalization by discriminating in favor of the local". It is important to note, however, that this does not mean "walling off the outside world" through nationalistic protectionism (see Micahel Schuman, Going Local: Creating Self Reliant Communities in a Global Age). Nor does it mean creating communal autarky, with self-sufficient groups cutting themselves off from the monetary economy. International trade, travel and cultural exchange would continue, but locally-controlled, diversified economic activity would reorient production and service provision towards meeting the needs of the community first.

Why Localize?

Individuals and organizations who are already working to strengthen their communities and local economies are doing so for a multitude of reasons. This is not an ideologically driven movement that fundamentally rejects the global in favor of the local, nor is it based on one blueprint solution or economic model. Rather, it is an organic process motivated by a number of interrelated factors.

Economic globalization has gradually increased the power of multinational corporations and ‘too-big-to-fail' banks, not only over the means of production and distribution of goods and services, but also over the entire democratic and social process. In light of the recent financial crisis, where governments spent billions of taxpayer dollars on bailing out the banks that were partly responsible for causing the crisis, the  overbearing influence of the corporate and financial services sector has never been clearer.

In response, people around the world are moving to reclaim local control over the economy through alternative business practices and banking. Campaigns such as Move Your Money aim to revitalize community banking so that finance is redirected towards local needs rather than speculative profits and bonuses. Alternative business structures such as cooperatives and community-supported agriculture also encourage local ownership and production, thereby closing the divide between owners and workers or producers and consumers upon which the corporate model thrives.

A growing awareness of the ecological impacts of a globalized, fossil-fuel dependent economy is also inspiring people to ‘go local'. With the twin specters of climate change and peak oil looming, people are recognizing an increasing need for localized production and distribution in order to build a viable alternative to the current environmentally destructive, export-driven model. Projects such as Transition Towns and Ecovillages are largely motivated by a belief that sustainable living requires resilient, diversified local economies. Many of the strategies adopted by these communities are not new; community gardens and local currency schemes, for example, have long been used to ensure local resilience.

For many people, the motivation to rebuild local economies goes beyond practical concerns about the unstable and unsustainable nature of the globalized economy. It is rooted in a deep dissatisfaction with the lifestyle and values promoted by a system obsessed with efficiency, competition and consumerism. Re-rooting economic activities at a local level offers a way to rebuild the community ties that have been eroded by a tendency towards competitive individualism in society. In the words of David Korten, author of Agenda for a New Economy: From Phantom Wealth to Real Wealth, the broader goal of a localized economy is to shift "its favored dynamic from competition to cooperation, and its primary purpose from growing the individual financial fortunes of the few to building living community wealth to secure the health and well-being of everyone."

Promoting Small-Scale on a Large-Scale

Currently, the shift towards the local remains a fringe, grassroots process, made up of small-scale initiatives as diverse as the cultures and environments in which they are taking place. As Helena Norberg-Hodge argues in her contribution to The Case against the Global Economy: And For a Turn Toward the Local, for these efforts to translate into a wholesale shift in the mainstream economy, they must be accompanied by policy changes at both the national and international level.

With politicians pandering to the interests of corporations in the never-ending pursuit of economic growth, policy support for local economies remains near to nonexistent. Many government policies, such as ensuring the availability of cheap fuel, liberalizing markets, subsidizing agribusiness and bailing out the big banks, essentially act as a form of corporate welfare in support of large-scale, profit-driven multinationals at the cost of small-scale community ventures. The same is true at the international level. Agreements under GATS and the World Trade Organization bar governments from discriminating in favor of the local, all in the name of free trade and the logic of economic competition.

Yet if economies are geared towards meeting local needs first, rather than becoming ever more efficient at producing goods for export-oriented trade on international markets, the logic of competition and ‘comparative advantage' flies out the window. The only question that remains is how to untangle government priorities that currently favor of big business and globalized finance, and to gain political and popular public support for a more diversified global economy geared toward localization. In order to build a new paradigm for development, one that empowers communities and works within the ecological limits of the planet, the rules of the game need to fundamentally change.

‘Going local' offers a way for people to push for transitional economic alternatives from the ground up, but individuals, communities and civil society must come together to form a powerful political movement demanding that the necessary shift toward local empowerment takes place through national and international policy measures. As multiple and interrelated global crises reveal the socially and environmentally destructive nature of the current globalized economy, the time for such a movement has never been more propitious - an opportunity that we all must make the most of.

Further Resources

Business Alliance for Local Living Economies

Go Local - Yes! Magazine

The E. F. Schumacher Society

Move Your Money

The New Rules Project - Institute for Local Self-Reliance

Transition Culture

Anna White

Anna White is the editorial assistant at Share The World's Resources. She can be contacted at anna(at)stwr.org.

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